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 Assuming approval by the German and other parliaments, 13 billion
euros should be in Athens next Thursday to pay pressing bills and a
further 10 billion will be set aside at the European Stability
Mechanism, earmarked to bolster Greek banks' capital.
In all, euro zone governments will lend 26 billion euros in a first
tranche of the bailout before reviewing Greece's compliance with
their conditions in October.
One remaining uncertainty - aside from Tsipras' ability to deliver
sweeping budget cuts and privatizations opposed by many of his own
party - is the role of the International Monetary Fund. After
backing two previous bailouts, the IMF renewed its call for the
Europeans to grant Athens debt relief - a bone of contention between
the Eurogroup and the Washington-based Fund.
Managing Director Christine Lagarde told the Eurogroup by telephone
that she could not commit until the IMF board reviewed the situation
in the autumn. Officials said the Fund needed more assurances and
detail on Greek reforms, notably to pensions, and steps to persuade
it that Greece's debt burden was sustainable.
But after deadlock since January that ravaged the already weak Greek
economy and ended in a dramatic U-turn a month ago by the
anti-austerity leftist government to avert Athens' expulsion from
the euro, there was a cautious sense of optimism among ministers
gathered in a Brussels deep in summer holiday languor.
"After six months of very difficult negotiations with lots of ups
and downs, we finally have an agreement," Greek Finance Minister
Euclid Tsakalotos told reporters on Friday. His appointment by
Tsipras six weeks ago in place of his abrasive predecessor has been
hailed by counterparts as a mark of a new Greek "realism".
"After the changes in the government and the crises that we had, the
cooperation with let's say the changed Greek government is very
constructive, very well organized," Jeroen Dijsselbloem, the Dutch
minister who chaired the meeting, told reporters.
DEBT BURDEN
Even Germany's Wolfgang Schaeuble, who last month floated a Greek
exit from the euro as Tsipras hesitated to agree terms with fellow
leaders, sounded upbeat, if still wary of a new tone in Athens that
caused an angry split in Tsipras' leftist party, with nearly a third
of Syriza lawmakers rebelling in parliament.
"We will have to wait and see," said Schaeuble, who has become a
hate-figure for rigid austerity among Greeks tired of five years of
soaring unemployment. "This is an opportunity. But what is decisive
is that Greece does what it says it will do."
Schaeuble was among numerous ministers who stressed they saw it as
vital that the IMF take part in the third bailout, as it has in two
programs totalling 240 billion euros since 2010.
Not only would IMF lending reduce the amount needed from Europe -
possibly by a sum similar to the 16 billion euros the Fund had ready
when the second bailout program expired - but the IMF's reputation
for rigor would reassure skeptical parliaments and financial markets
that conditions would be met.
Lagarde said in a statement that Europe would need to provide
"significant" debt relief as a complement to reforms Athens is
trying to put Greece's finances on a sustainable path.
"I remain firmly of the view that Greece’s debt has become
unsustainable and that Greece cannot restore debt sustainability
solely through actions on its own," she said, highlighting what has
become a significant bone of contention with the European
institutions with which the IMF helped negotiate the new accord.
Led by Germany, euro zone governments have ruled out taking a
"haircut" to reduce the nominal principle of Greece's debts to them.
But the Eurogroup said in its statement that it would consider
longer grace periods and repayment periods if Greece successfully
met its loan conditions by an October review.
Dijsselbloem said it was still unclear that Greece could not afford
to service its debts but he was optimistic differences with the IMF
could be overcome. French Finance Minister Michel Sapin, among
strong supporters of helping Greece stay in the euro zone, said that
a consensus was emerging on the Greek debt.
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Critics of past bailouts argue they can create a downward spiral as
governments pump money out of the country to service foreign loans,
choking domestic economic activity that generates the tax revenues
the state needs to pay its debts. EU officials argue that Greece is
borrowing already on very favorable terms.
While the broad outlines of the bailout agreement were set at a
marathon, all-night summit a month ago and further filled in by
negotiators who concluded a draft on Tuesday, euro zone ministers
devoted some of their six-hour meeting to detailing a plan to
recapitalize Greek banks. These have been ravaged by the uncertainty
and by capital controls imposed in late June.
The agreement foresees up to 25 billion euros being set aside for
bank capital, with 10 billion of that immediately and up to 15
billion by mid-November, after officials conduct stress tests of the
banks' requirements. Shares issued by banks in return for capital
are to be placed in a privatization fund.
After some discussion in the Eurogroup, ministers decided that bank
depositors would not see funds confiscated as part of a "bail-in" of
other creditors. EU rules taking effect next year could have hit
account holders but, Dijsselbloem said, ministers felt that prospect
would hamper stabilizing the banking system.
REVOLT IN ATHENS
After debating through the night on Thursday, the Greek parliament
gave its backing to Tsipras' plans to legislate what creditors want,
though he had to rely on opposition votes after nearly a third of
his own supporters rebelled, forcing him to consider a confidence
vote that could pave the way for early elections.
After defeating conservatives in January, Tsipras remains hugely
popular for standing up to Germany and he would be expected to win
again, given an opposition in disarray.
A hardline faction in his party effectively gave notice it might
break away, raising the prospect of Tsipras having to build a new,
possibly unstable, coalition.
That could mean further uncertainty in Greece and in a wider euro
zone economy which data on Friday showed still struggling to meet
even modest growth expectations.
EU leaders say new measures to consolidate the euro zone mean
threats to its survival are much weaker than when it first was hit
by the global debt crisis. But German-inspired fiscal rigor despite
continued high unemployment, especially among the young, continues
to fuel opposition to European integration.
Nonetheless, Tsipras defended his abandonment of election promises
he made to austerity: "I do not regret my decision to compromise,"
he told the parliament in Athens. "We undertook the responsibility
to stay alive over choosing suicide."
($1 = 0.9001 euro)
(Additional reporting by Robert-Jan Bartunek, Tom Koerkemeier,
Barbara Lewis, Alexander Saeedy, Julia Fioretti and Foo Yun Chee in
Brussels, Toby Sterling in Amsterdam, Deepa Babington, Karolina
Tagaris Michele Kambas and George Georgiopoulos in Athens, Noah
Barkin in Berlin and Tim Ahmann in Washington; Writing by Alastair
Macdonald; Editing by Giles Elgood and Susan Thomas)
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